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An Economist and a Biologist Test a Theory

The year 1981 was a big one in my business life. It was the year Paul Allen and I incorporated Microsoft in our home state of Washington.

As it turns out, 1981 also had big implications for my current work in health, development, and the environment. Right when Paul and I were pulling all-nighters to get ready for the release of the MS-DOS operating system for the brand new IBM-PC, two rival professors with radically divergent perspectives were sealing a bet that the Chronicle of Higher Education called “the scholarly wager of the decade.”

This bet is the subject of Yale history professor Paul Sabin’s new book. The Bet: Paul Ehrlich, Julian Simon, and Our Gamble over Earth’s Future provides surprising insights for anyone involved in addressing the world’s “wicked problems.” Most of all, it gave me new perspective on why so many big challenges get bogged down in political battles rather than being focused on problem-solving.

So what was the bet? University of Illinois economist Julian Simon challenged Stanford biologist Paul Ehrlich to put his money where his mouth was and wager up to $1,000 on whether the prices of five different metals would rise or fall over the next decade. Ehrlich and Simon saw the price of metals as a proxy for whether the world was hurtling toward apocalyptic scarcity (Ehrlich’s position) or was on the verge of creating greater abundance (Simon’s).

Ehrlich was the country’s, and perhaps the world’s, most prominent environmental Cassandra. He argued in books, articles, lectures, and popular television programs that a worldwide population explosion threatened humanity with “the most colossal catastrophe in history” and would result in hundreds of millions of deaths from starvation and dire shortages not just of food but all types of raw materials.

Simon, who passed away in 1998, was a population optimist. A disciple of conservative University of Chicago economist Milton Friedman, Simon believed the doomsayers’ models gave little or no credit to the power of efficient markets and innovative minds for developing substitutes for scarce resources and managing out of crises. He went so far as to claim that population growth should “thrill rather than frighten us.”

At the time of the bet, Simon was a relatively unknown scholar who loved using the eminent Ehrlich as a foil. In public, Ehrlich didn’t even acknowledge Simon by name. Nonetheless, Ehrlich rose to Simon’s bait. “It seemed a small price to pay to silence Julian Simon for ten years,” in the words of Sabin.

Who won the bet? Simon. Definitively. Even as the world population grew from 4.5 to 5.3 billion in the 1980s, the five minerals that were included in the bet—chromium, copper, nickel, tin, and tungsten—collectively dropped in price by almost half. Ehrlich begrudgingly made good on the bet. But to this day he still does not concede that his predictions of Mathusian horrors have been off the mark. Similarly, he does not acknowledge that the discipline of economics has anything of value to contribute to discussions of population or the environment.

Even though I had gone back in recent years to read Ehrlich’s Population Bomb (1968) and the Club of Rome’s intellectually aligned book Limits to Growth (1972), The Bet was a stark reminder to me of how apocalyptic a big part of the environmental movement has been. Ehrlich claimed to have science on his side in all of his predictions, including how many people the Earth can feed. He stated as scientific fact that U.S. lifestyles were unsustainable, calling developed countries “overdeveloped countries.” Limits to Growth claimed the credibility of computer modeling to justify its predictions of apocalypse.

Simon was equally extreme in his rhetoric. He was as reflexively dismissive of the discipline of ecology as Ehrlich was of economics. And his sound bites provided great fodder for Ronald Reagan and other conservative politicians eager to push back on the pronouncements of environmental scientists. But history generally has been kinder to his predictions than those of Ehrlich.

We know now that Ehrlich was extremely wrong and that following his scientific certainties would have been terrible for the poor. He floated the concept of mandatory sterilizations. He pushed aggressively for draconian immigration policies that, if enacted, would have kept out much of the foreign talent that came into the U.S. over the past three decades and added greatly to the U.S. economy. Ehrlich and his fellow scientists criticized the Green Revolution’s agricultural innovations because, in his view, “we [will] have an even bigger population when the crash comes.”

On population, Ehrlich ignored the evidence that countries that developed economically dropped their birth rate. (The current view is that population will rise only modestly after hitting a bit over 9 billion by 2050.) Granted, population growth is a huge issue in some poor countries, where it creates locally some of the instability and scarcity that Ehrlich foresaw for the entire world. But fortunately, there is strong evidence that if we continue to produce innovative reproductive health tools and make them available to women who want them, and we keep pushing forward on economic growth, there will be fewer and fewer of these places in the decades ahead.

Matt Ridley’s book The Rational Optimist (2010) is probably the best statement today of the Simon case, and Ridley was more careful than Simon was in his claims. Even though I agree with a lot of the book, it too easily dismisses the need to address problems of the poorest, climate change, and the oceans.

The recent Economistspecial report on biodiversity makes a strong case that economic growth allows us to make environmental concerns a priority. It contrasts the environmental record of the rich countries with that of poor countries to say that economic growth is the best hope for environment protection. All of this suggests to me that we should be wary of broad attacks on economic growth. (The authors of the special report admit that it’s not focused on climate change and mostly leaves aside the mismanagement of the oceans, which is tragic problem that deserves more focus.)

I recommend The Bet to anyone wanting to understand the history of the divisive discussions we have today, especially the stalemate over climate change. Sabin makes a strong case that Ehrlich’s brand of science made it easy for conservative critics to caricature environmentalists as doom merchants and fear mongers who peddle dubious science as a means of advancing their big-government agenda.

And Simon is far from blameless. “Julian Simon and other critics of environmentalism … have taken far too much comfort from extravagant and flawed predictions of scarcity and doom,” writes Sabin. “By focusing solely and relentlessly on positive trends, Julian Simon made it more difficult to solve environmental problems.”

It’s a shame that extreme views get more attention and more of a following than nuanced views. We see this dynamic clearly when the Intergovernmental Panel on Climate Change does its best to be clear and impartial in conveying what is known on the key issues, but both liberals and conservatives make it hard for the public to understand the panel’s nuanced conclusions.

I wish there more people who took the middle ground and who were as prominent as Simon or Ehrlich. So here’s my question to you: What’s the best way to encourage scholars to combine the best insights from multiple disciplines? How can we elevate the status of scientists and spokespeople who refuse the lure of extremism and absolutism?